Best World Redefines Wellness for Life

Date: October 6, 2016

Untitled Document

Best World International Ltd

SGX Code 5ER
Mkt Cap S$M 424.3
% Price Change YTD 470.9
% Price – Div Adj. YTD 489.2
% Price – Div Adj. [1 Year] 862.8
% Price – Div Adj. [3 Years] 1,037.2
% Price – Div Adj. [5 Years] 1,403.8
Price vs. 12M High% -8.4
Price vs. 12M Low% 962.5
% Div Yld 1.8
% ROE 32.4
P/E 20.0
P/BV 5.8

Source: SGX Stockfacts ( 28 Sept 2016)

It was a friendship that spanned three decades and resulted in the founding of the only direct-selling company listed on the Singapore bourse.

The bond between the founders of Best World International Ltd – Dora Hoan and Doreen Tan – was forged in 1986, when Hoan was the marketing manager of another direct-selling business, and Tan one of its top distributors.

“Over the years, we built a firm friendship, and when I decided to quit due to conflicts within the senior management team, the first person I called was Doreen,” recalled Hoan, who was 37 then.

“She suggested we resign together and strike out on our own.”

That proved to be a momentous decision – Best World was established in 1990.

“On hindsight, it was the right time for us to set up a company together – we were neither too young nor too old, and had sufficient experience and energy,” Hoan added.

“We were also a good match because of our different strengths – I’m good in management and marketing, while Doreen has deep knowledge of nutrition and skincare.”

Hoan, a History graduate from Singapore’s then Nanyang University, went on to get her Master in Business Administration from the National University of Singapore, and later, a PhD from the Western Pacific University in the US.

Tan has a degree in Applied Nutrition from the American Academy of Nutrition, a doctorate in Naturopathy from Canyon College, and an Honorary PhD from Kennedy Western University, also in the US.

Both hold co-Chairman roles in Best World, whose name reflects the company’s twin ambitions of offering top-quality products, while growing its presence globally.

“I wanted to provide the best and most effective beauty products to customers who are battling skin problems – that was my dream,” said Tan, who was 36 then.

Hoan’s vision was about scale. “I wanted to put the brand on the world map,” she beamed.

Need, Not Want

Today, Best World specialises in the development, manufacture and distribution of premium skincare, personal care, nutritional and wellness products. It has a network of more than 422,000 independent distributors and members in 12 markets, including Thailand, Taiwan, Indonesia, Malaysia, Vietnam, Hong Kong, China, South Korea, Philippines, Myanmar and UAE.

The company’s star product is its DR’s Secret skincare, specially formulated for Asian skin, and which accounts for almost 70% of group revenue. Other offerings include its Avance health supplements and Optrimax weight management products.

Listed on the Singapore Exchange in July 2004, Best World has a market capitalisation of S$424 million. Its shares have surged nearly six-fold in the 2016 year-to-date, generating a dividend-inclusive total return of 489.2%. In comparison, the benchmark Straits Times Index (STI) and broader FTSE ST All-Share Index have registered total returns of 2.6% and 4.6% respectively.

The stock has jumped 10-fold in the last three years, and gained more than 12-fold over the past five years.

Best World averaged an annual revenue of S$66.6 million between the financial years ended 31 December 2011 and 2015. It also grew its net attributable profit from S$274,000 to S$10.1 million over the period, reflecting a compounded annual growth rate of 143%.

The company has a strong balance sheet, with S$48.3 million in cash and cash equivalents as at 30 June 2016, and negligible debt. While it has a policy of distributing at least 30% of earnings to shareholders annually as dividends, the company has paid out 43% of net profits as dividends in 2013 and 2014, and 44% in 2015.

Innovation is instrumental to the group’s growth, particularly in the area of product formulation, Tan said.

“Differentiation is critical, and we are focused on developing products that people need, rather than want,” she noted.

“We are where we are today because of the purity, efficacy and quality of our products. The direct-selling model relies very much on word-of-mouth – if our products are no good, they will not sell.”

Its DR’s Secret range has also seen significant improvements since it was launched in 2001. The formula and ingredients have been revamped and upgraded continually over the last 15 years.

“The 10 products under the DR’s Secret range can be used for various skin types, and to solve any skin problem, because all of them are highly customisable in terms of application,” Tan added.

Rosy Outlook

Looking ahead, management is optimistic of achieving a “positive” performance this year, Hoan said. “Over the next few years, Taiwan, China and Indonesia will be the markets that will see substantial growth.”

Initially, venturing into developing markets was fraught with challenges. When Best World set up its Philippine operations, it entered the market with its DR’s Secret range, but sales failed to take off.

“Because of the country’s lower income demographic, it wasn’t easy to close sales or recruit distributors. Forced to think out of the box, we revamped our strategy,” Hoan recalled.

Best World re-focused on its Optrimax nutritional range, and made them affordable by repacking the contents into smaller sizes with lower prices. After that, sales began to climb.

As at 30 June 2016, Singapore and Indonesia accounted for 3.5% and 3.1% of group revenues respectively, while Taiwan and China contributed 63.7% and 25.8% respectively.

“We’ve built a strong foundation in Taiwan by conducting regular training and sales events, and our distributors now possess the relevant know-how. As a result, sales have jumped from a growth of 20% year-over-year to an increase of 141%,” Hoan said.

In June, Best World was granted a direct-selling licence in Hangzhou by China’s Ministry of Commerce, nearly two years after submitting its application. Prior to this, the company had been readying the market by distributing its DR’s Secret products to nail spas, beauty and hair salons. With the award of the licence, these local business operators and their respective customers will be converted to distributors of Best World products.

“China offers huge potential for us, and having already built the brand and customer base over the last few years, we’re set for robust growth over the next five to eight years,” Hoan added.

In 2006, China lifted its eight-year ban on direct selling and started issuing licences to businesses. According to data from the World Federation of Direct Selling Associations, China was the world’s second-largest direct-selling market behind the US in 2015, with an annual sales volume of US$35.5 billion and a growth rate of 19%. The country is expected to eclipse the US in terms of direct sales volumes by end of 2017, according to Direct Selling News.

Chinese consumption will also continue to expand at a rapid clip. Spending is projected to rise 9% annually through 2020 to US$6.5 trillion, even if annual gross domestic product growth cools to around 5%-6%, according to forecasts from The Boston Consulting Group. Key drivers include the importance of e-commerce, a new generation of free-spending, sophisticated consumers, the rise of the upper-middle class, and increasing affluence.

Outside Asia, Best World’s regional subsidiary in Dubai, set to be operational by the fourth quarter of this year, will serve as a springboard for its entry into Middle East, India and Europe.

At home, its state-of-the art skincare manufacturing facility in Tuas, scheduled for completion in the third quarter of 2017, is expected to cut manufacturing lead times and improve production quality controls. The site, which was purchased for S$10 million, spans 4,550 square metres.

“The new plant will help us manage output and quality to meet the high demand for DR’s Secret products in Taiwan and China,” Hoan said.

Currently, the company outsources the manufacturing of its skincare products and health supplements to US, South Korea, Taiwan and New Zealand.

Glass Half-Full

Given the scale of the company’s ambitions, both women say they are nowhere near retirement, unlike their spouses. When Hoan, 63, is not catching up with her 34-year-old daughter, she is strategising for the future.

“I am an active thinker. I enjoy developing new ideas and methods to take Best World to greater heights,” she chuckled.

The process is an immensely rewarding one. “When I see the company expanding, distributors growing their income, staff maturing in their capability and professionalism, I get a great sense of achievement. This shows we are progressing in our goal to develop Best World into a global brand,” she added.

Hoan admits her optimism, painstakingly cultivated over the last 39 years of direct selling, is her best asset and keeps her going.

“In life and in business, you will face many challenges. If you cannot stay positive, you would not be able to overcome difficulties and would have given up along the way. Especially in direct sales, without a fixed salary, a positive mindset is very important.”

Harmony, integrity and a cheerful attitude are also values she tries to develop within the company. “Those qualities allow you to build trust with your customers, which are essential in growing the brand.”

For Tan, 62, her focus remains on deepening her industry knowledge – including nutrition and wellness – through reading. Outside work, she spends time with her four grandchildren.

“I place a premium on family values and morals. If you do the right thing, everything else will fall into place,” she said.

“At night, I sleep like a baby because my conscience is clear – we do not fear complaints because our products are all of the highest standards and quality.”

This pride and satisfaction is echoed by Hoan as she looks back on her 26-year history in the company.

“Best World embodies the brand promise of being able to live life at your best. We’ve built this foundation that offers physical health, financial freedom, emotional growth, and social wellness for all our staff and distributors.”

This more than makes up for the fact that many peers their age are spending time playing golf, shopping or socialising.

“We’re different. We’re still working hard – much harder than our men – because this is our passion, and we’re happy to be doing it,” Hoan added, with a laugh.

Financial results

Year ended 31 December (S$ ‘000) 2015 2014 2013 2012
Revenue 101,672 75,265 41,081 48,218
Gross profit 76,867 55,990 31,815 37,241
Net attributable profit 10,104 4,054 1,429 1,800

Quarter ended 30 June (S$ ‘000) 2Q 2016 2Q 2015 % Change
Revenue 51,568 21,029 145.2
Gross profit 38,594 15,935 145.2
Net attributable profit 7,369 2,106 249.9

Outlook & Risks

Factors that may impact Group’s performance in the next 12 months:

  • Professional fees/expenses: These costs and other related expenses may be incurred as the Group explores inorganic growth opportunities (including gaining access to new markets, acquiring new distribution channels, attaining exclusivity to new products/services, tapping into synergistic businesses)​
  • Forex risks: A weaker SGD against the USD or any other currencies that the Group frequently trades in may lead to higher cost of goods. Fluctuating currencies of key markets the Group operates in against SGD may impact financial performance
  • Higher YoY expenses seen: Increased administrative and depreciation costs related to new JV with Prolife Biobank Pte Ltd and depreciation of the newly acquired Tuas property and machinery for the factory facilities
  • Higher software license fees and implementation costs due to efforts to improve customers’ online shopping experience and after-sales services
  • Other ongoing factors that may affect performance include timeline required for product registration in various markets, natural disasters, local direct selling regulations, product regulations and market competition


Best World International Ltd

Founded in 1990, Best World International is a Singapore-headquartered company which specialises in the development, manufacture and distribution of premium skincare, personal care, nutritional and wellness products, to customers through its direct selling network in 12 markets. Best World has an established network of more than 420,000 independent distributors and member customers. In July 2004, Best World became the first direct-selling company to be publicly listed on the Singapore Exchange. Today, Best World is a key regional player with presence in Singapore, Thailand, Taiwan, Indonesia, Malaysia, Vietnam, Hong Kong, China, Korea, Philippines, Myanmar, and Dubai. The Company also manufactures and distributes the Aurigen line of supplements in China through drugstores in 28 provinces of PRC.

The company website is:

Click here for the company’s StockFacts page.

For second quarter ended 30 June 2016 financial results, click here.

First published on 30 September 2016 on

Text: Jennifer LH Tan
Photo: Company file

kopi-C is a regular column on SGX’s My Gateway website that features C-level executives of leading companies listed on the Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations.

For previous editions of kopi-C: the Company brew, please click here.